Thursday, 22 December 2011

Double whammy for the Government.

Yesterday was a victory for common sense when the High Court overruled the government's arbitrary decision in October to halve the feed in tariff for renewable energy from 43.3pence to 21pence. Mr Mitting the High Court Judge described Greg Barker and the Departement for Energy an Climate Change (DECC)'s decision as 'legally flawed' opening the way to a delay in implementing the reduction.

The government's rush to cut a subsidy for people who generate solar electicity on their roofs was clumsily handled and may have fatally damaged a growing industry which had the potential to provide tens of thousands of jobs, says a new report by MPs on two influential select committees.

Joan Walley MP, the chair of the Environmental Audit Committee further said:

"It doesn't make economic sense to let the sun go down on the solar industry in the UK. As well as helping to cut carbon emissions, every panel that is installed brings in VAT for the government and every company that benefits from the support is keeping people in work. The government is right to encourage people to focus on saving energy before fitting solar panels, but these proposals will stop nine out of 10 installations from going ahead, which will have a devastating effect on hundreds of solar companies and small building firms installing these panels across the country."

The rationale behind the government's decision to reduce the feed in tariff was the fact that the cost of installing solar pv had fallen 30% and that the cost of the subsidies to household bills would be £26 for every household per annum in 3 years time or £950 million a year. The £950 million figure seems to be completely off the wall as the total cost of Feed in Tariff from the 1st April 2010 to 30th September 2011 is only £45 million or £1.80 per household. How DECC come up with a figure twenty fold more than the current cost of the Feed in Tariff is beyond me and it seems beyond Mr Mitting as well.

Congratulations to Friends of the Earth and the two solar companies who bought this action.

5 comments:

Bob About
said...

The feed in tariff was always a badly thought out policy that would benefit many middle class people who could afford the initial investment. Why should pensioners and those on low incomes (those living in fuel poverty) subsidise those who can afford to shell out many thousands of pounds in return for a 10% + return on their investment?Surely a case of the rich getting richer?

The FIT was due to be reduced from April 2012 until it actually reached the unit cost of electricity at present the cost of the FIT subsidy is £1.80 per annum based on 25 million homes.

A far greater cost to the consumer is high energy bills based on increased profits for shareholders.

The FIT system is an ethical investment...you produce renewable energy, you reduce your carbon footprint and you get a decent return for investment. To persuade people of the benefit of an initiative you need an incentive that that is what the FIT is. Entrepreneurship and risk need to be rewarded.

The statistics produced over the next 6 months will prove what a disincentive Greg Barker's decision has been and the negative impact that has had on solar industry and general employment.

A better example of the VERY rich getting VERY much richer is the Farm Subsidy system but I doubt you'll want to say too much about that.

I have to chuckle at the comment you made in your response:- "Entrepreneurship and risk need to be rewarded."While I can appreciate the entrepreneurial attitude that many like yourselves have made in investing in solar panels on your roof, I fail to see the risk! Guaranteed long term returns on your investment. When you put the panels on your roof, did you view it as a risk or a safe investment? It reminds me of how the Tories sold off shares in nationalised industries to the public (at least those who could afford it!)You may see it as the politics of envy, I just see it as a poor use of government money. Not quite such how such a senior member of Plaid Cymru could take such a public stance.

So Plaid stand up for the good of the nation? OK, I can accept that.You say they don't get hung up on ideology. Many would feel that they are a party of ideology (as to be fair are most political parties. It is the ideology that differentiates them.)My comment wasn't necessarily aimed as an attack on Plaid Cymru. (Plaid Cymru was only mentioned in the end.)My attack was on the fact that the Feed In Tariff was little more than a middle class bribe/reward. People like yourself ((I assume you took the pieces of silver!) took it because it was a relatively risk free investment with a good long term of return.Perhaps Plaid Gwersyllt does protest too much???

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